Explainer for Enron

First he went to bat for Charles Keating, the savings-and-loan cheat. Then came Michael Milken, the junk-bond criminal. Now Chicago's Daniel Fischel is taking on the case of Enron Corp.'s Jeffrey Skilling.

In hiring Fischel as an expert witness for the landmark Enron criminal trial slated to open Monday in Houston, the indicted energy executive is banking on a heavyweight law professor who has made a fortune helping big shots in big trouble.

Unlike academics who stick to research and education, Fischel has guided one of the nation's top litigation consultancies for years, parlaying his University of Chicago connections into $1,000-per-hour fees for professional testimony.

Along the way he has shaken up the ivory tower with megabuck business deals, conflict of interest allegations and a love affair that ended his tenure as dean. Fischel has no problem going against public opinion when he concludes the facts support more charitable interpretations of the most vilified corporate conduct, as his backing of Keating and Milken suggests.

Skilling will be counting on Fischel and other hired guns to help defuse the prevailing view of Enron as a fraud-riddled house of cards.

"You need careful and lucid explanations," said Randy Oppenheimer, one of Skilling's attorneys. "People like Dan have the capacity to explain some pretty important information to the jury. He's a great teacher."

U.S. District Judge Sim Lake has yet to rule on what role Fischel can play in the trial, and prosecutors have sought to limit his testimony, or exclude it altogether.

Court filings indicate that Skilling wants the 55-year-old legal scholar to cast a positive light on Enron's off-balance-sheet transactions, its public disclosure to investors and its once-vaunted business model. Those opinions would support Skilling's contention that federal prosecutors are, as Oppenheimer put it, "attempting to criminalize business behavior."

It's a tall assignment, even for a practiced witness who lists on his resume some 200 cases in which he has served as an expert, involving such giant companies as Philip Morris, Tyson Foods and Sunbeam. The federal government has repeatedly hired him, and Tribune Co., owner of this newspaper, has used his services as well.

Fischel is known for an unflappable courtroom demeanor, and a knack for applying the free-market, anti-regulation principles of the University of Chicago to myriad business disputes. He is particularly sought-after for economic modeling, in which he estimates financial damages from corporate wrongdoing in securities cases.

"Dan is in some senses a professional expert witness and one of the best," said John C. Coffee Jr., a Columbia University law professor. "He usually does financial models that show much less in financial damages than the plaintiffs claim."

In the recent Enron criminal case involving a manipulated sale of power-plant barges in Nigeria, for instance, Fischel pegged investor losses from the scheme at $120,000, disputing a government expert's estimate of $43.8 million. At sentencing the judge came closer to Fischel, putting the loss at $1.4 million.

Although Fischel's principles align him with the conservative "Chicago School" of law and economics, earlier this month he joined the rival Northwestern University School of Law. And while he remains an emeritus professor at the University of Chicago and has made large donations, the school's current administration would not discuss him.

At least one former colleague said he is glad to see Fischel move on.

"I don't think you can do what he's doing and be of good character," said Gary H. Palm, a retired University of Chicago law professor who is suing over his dismissal in 2000 when Fischel served as dean. "His point of view is that greed is good. You can't be of good character and defend greed no matter how big it is."

Not everyone who considers Fischel a defender of corporate misconduct believes his character is flawed. "Dan's a man of strong views, but I respect him," said Lawrence J. Fox, an attorney and sometime expert witness who once debated Fischel about the regulation of lawyers. "He believes in what he says. He's a man of integrity in that sense."

Fischel, who declined to comment for this story, arrived at the University of Chicago as a law student after earning degrees from Cornell and Brown. He worked closely with influential legal scholars Richard Posner and Frank Easterbrook, who now serve on the 7th U.S. Circuit Court of Appeals. He joined the faculty for good after a brief teaching stint at Northwestern.

Fischel began testifying as an expert in the early 1980s, and a few years later took on a top management role at the Lexecon consulting firm, which currently employs about 200.

His contrarian opinions won him enemies, including Bill Lerach and Mel Weiss, the kingpins of securities class-action lawsuits. Their law firm sued him in a case related to the savings-and-loan industry, prompting Lexecon's gun-shy corporate clients to flee.